Avaya Cuts Jobs, Employees React to Layoff Notification

Avaya has begun to cut jobs in its North America, Central America and Latin America offices Tuesday. The company’s actions are part of significant efforts toward cost-cutting measures of $225 million-$250 million this quarter. Channel Futures is working to confirm the exact number of employees laid off and will update this story accordingly.

Laid off employees took to the site TheLayoff to anonymously voice their concerns.

“The [HR] call I was on barely lasted five minutes and was basically, ‘if you are on this call, you have been affected and today is your last day. HR will send you an email with more info,’ and for us to forward to our personal email as we will be locked out of system today. Still awaiting the HR email,” an anonymous Avaya employee wrote.

Avaya spokespersons said that implementing these measures required careful consideration and difficult choices. The company does not take decisions that impact people lightly.

Avaya’s Alan Masarek

Alan Masarek is Avaya’s CEO.

“As previously stated, lowering our costs, including through a reduction in our workforce, is necessary to position Avaya as a more agile and innovative organization and to align Avaya’s cost structure with our contractual, recurring revenue business model,” Masarek said. “We will minimize the impact to customers with respect to sales and support and remain committed to our long-range innovation and product development roadmaps. We are committed to treating impacted employees with utmost dignity and respect and seamlessly providing our customers with outstanding communications solutions and support.”

A More Focused Company?

Avaya leadership are confident that this is a step in the right direction to correct their financial standing and lead the company into the future.

Third-quarter revenue for the organization was down 20% year over year to $577 million, according to its earnings report. In addition, Avaya carries sizeable debt, having borrowed $600 million in June. It also holds significant convertible debt maturing in less than a year. An internal investigation by Avaya’s audit committee of the company’s board of directors is underway to review third quarter results. The committee is also examining a whistleblower letter.

Dave Michels is the principal analyst and founder of TalkingPointz. He has written extensively about Avaya’s financial problems.

TalkingPointz’s Dave Michels

“Avaya is a very big and diversified communications provider. And they have some incredible customers that are doing just amazing things with Avaya technology,” Michels said. “What Avaya will be in the future is a more focused company. And I think Masarek has said that pretty clearly. Masarek said, ‘I don’t want the Avaya employees to do more with less. I want the Avaya employees to do less with less.’ And so he wants to focus the company on specific, strategic opportunities.”

A Different, Changing Vision

Michels added: “A new CEO or a new leader is going to see things differently than somebody who’s been there for a while. He’s going to see more silos [and] he’s going to see more duplication and unnecessary effort. He’s going to see where internal processes are too complicated, and he’s going to fix them. And in many ways a headcount reduction can be beneficial. The question is, how many can you afford to lose?”

These aren’t Avaya’s only layoffs this summer. David Storm, an engineer who worked for the company for 25 years, told Channel Futures that Avaya let go of 150-200 employees in its services division in July. Storm said he was part of that number.